Second man sentenced in investment scam

Feb. 21, 2013 @ 05:09 AM

The co-owner of a supposed investment firm in the Triad has been sentenced to prison for defrauding local clients of more than $3 million, the second man associated with the business to draw prison time.
Nicholas Cox, 35, of Lexington, was sentenced to three years for his role in Integra Capital Management, which operated from a nondescript, small office in south High Point near Swathmore Avenue and S. Main Street. Cox and Integra Capital co-owner Rodney Whitney, 50, of Archdale, told clients they would pool their money and invest in commodity futures and foreign currency exchange ­— known as forex — trading.
Federal prosecutors previously indicated that Cox and Whitney gave investors false contracts, tax forms and account statements to cover their scam. They also misled investors about their financial experience and potential returns on investments.
Instead of investing money from clients, prosecutors say the men paid off earlier investors from proceeds of later ones, all the while buying cars and property for themselves in a classic Ponzi scheme.
In announcing Cox’s sentence late Wednesday, the U.S. Department of Justice said the Integra Capital scheme bilked “commodities trading investors of more than $3.2 million.”
Following his prison term, Cox would serve three years of supervised release. He also was ordered to pay $1,981,477 in restitution, according to the Justice Department.
Cox had pleaded guilty in U.S. District Court for the Western District of North Carolina to one count of conspiracy to commit mail fraud, five counts of mail fraud and one count of conspiracy to commit money laundering.
Whitney had pleaded guilty to one count of conspiracy to commit mail and wire fraud and one count of conspiracy to commit money laundering. Last month, he was sentenced to five years in prison. 
The Justice Department indicates that Integra Capital solicited money from clients between September 2006 and January 2009.
“According to court documents, Cox and Whitney falsely represented, among other things, that Integra’s managers had more than 30 years of combined market experience; that Integra paid dividends of 2 to 5 percent of the investor’s initial investment, which was derived from Integra’s trading profits; and investors could remove their principal investments within five days upon giving notice to Integra,” the Justice Department reports.
Instead, Cox and Whitney used money provided by later investors to pay monthly investment returns promised to earlier investors. But the Justice Department said the Integra Capital co-owners used proceeds as well “to purchase real estate, to fund other business ventures and to purchase automobiles and other personal goods and services.”

pjohnson@hpe.com | 888-3528